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ECONOMY

MONDAY 28 MAY 2018,

SAUDI GAZETTE

9

DFZ Council discusses

initiatives to boost FDI

Apex awards contracts to start oil exploration operations in Egypt

Jeddah apartment rentals drop 15%

DUBAI –

The ninth meeting of

the Dubai Free Zones (DFZ) Coun-

cil, led by Sheikh Ahmed bin Saeed

Al Maktoum, Chairman of DFZC,

discussed initiatives to promote

foreign direct investment (FDI)

flows to the emirate’s free zones.

Key items on the agenda in-

cluded easing the business set-up

and reducing fees in the free zones,

the new e-commerce regulations,

the assessment of the effectiveness

of measures related to anti-money

laundering and combating terror-

ism financing, as well as Dubai

Blink initiative.

Sheikh Ahmed bin Saeed Al

Maktoum said: “Over the past de-

cades, free zones have been instru-

mental in increasing Dubai’s GDP

and FDI inflows that are experi-

encing high annual growth despite

the prevailing global economic cli-

mate. Today, we see the emirate’s

free zones as more than just eco-

nomic facilitators. Due to their leg-

islative and investment incentives

and through adopting strategic

initiatives that shape the future of

trade and economy to consolidate

Dubai’s status as an ideal business

destination, they have evolved into

globally competitive models.”

He added: “Members of the

DFZ Council place high impor-

tance on collaboration, innovation,

and integration that are essential

prerequisites for success and prog-

ress. This approach has gone a long

way towards enhancing the attrac-

tiveness of Dubai’s free zones for

investors and major international

companies.”

The DFZ Council reviewed the

updates on an initiative to create

a centralized electronic system to

CAIRO/ HOUSTON —

Apex Inter-

national Energy

(www.apexintl.com)

, an

independent oil and gas exploration and

production company focused on Egypt,

provides an update on their two explora-

tion concessions in the Western Desert.

The two concession agreements consist

of 1.7 million acres encompassing the

West Badr el Din (4,180 km 2) and South

East Meleiha (2,535 km 2) concessions,

located in the prolific Abu Gharadig Ba-

sin in Egypt’s Western Desert. As previ-

ously announced, Apex was awarded the

two blocks as part of the Egyptian General

Petroleum Corporation (EGPC) 2016 bid

round with the Production Sharing Con-

tracts signed on August 29, 2017.

Apex has awarded a contract to acquire

1,000 square kilometers of 3D seismic data

in the Southeast Meleiha Concession to

BGP International Egypt, LLC. Addition-

ally, recent tender awards have been made

to Weir, Vallourec Oil and Gas France, So-

conord S.A., and Tenaris Global Services

S.A. for the purchase of wellheads, well

casing and tubing to support the upcom-

ing drilling program. This work is part of

the bid commitment Apex made to invest

a minimum of $27.4 million during the

first exploration phase to perform detailed

geological studies, acquire and process 3D

seismic, and drill six exploratory wells.

“These contract awards represent an

important step in building Apex into an

upstream company of scale in Egypt,” said

Roger Plank, Apex international Founder

and CEO.

“The exploration potential on our two

concessions is considerable, and we are

eager to start operations later this year. We

started re-processing existing 3D seismic

at West Badr el Din Concession in Decem-

ber 2017 to identify drillable prospects.

At Southeast Meleiha Concession we will

commence 3D seismic acquisition opera-

tions in the fourth quarter. We expect to

begin drilling the first of six exploration

wells before yearend. We thank the Min-

istry of Petroleum and EGPC for their

continued support and partnership in ad-

vancing our exploration program. Egypt is

a very attractive place to explore and we

look forward to working together to tap its

considerable hydrocarbon potential.”

SG

RIYADH —

In 2017, rentals of

residential apartments dropped

by 10-15 percent in Jeddah, con-

trary to the upward trend wit-

nessed in the preceding years,

said a Real Estate Market report

produced by KPMG Al Fozan &

Partners, a leading audit, tax, and

advisory services provider that

includes a dedicated and special-

ized real estate team.

It explained that the drop in

rentals came as a consequence of

the departure of families of some

expatriates, especially those with

middle income, which contribut-

ed to an increase in the vacancy

rate in the market.

The report noted that the av-

erage rental rates of apartments

range between SR20,000 and

SR28,000 in eastern and south-

ern districts of Jeddah, while

the average rentals range from

SR35,000 to SR45,000 in the

northern and western districts of

the city. The average sale prices

of apartments in the city range

between SR2,500 per square me-

ter (southern side) and SR6,000

per square meter (western side).

However, these prices can go up

to SR10,000 per square meter in

high-end projects that offer addi-

tional amenities and services.

The report further described

that the sale prices and rental

rates of residential villas contin-

ued to decline during 2017. The

Sheikh Ahmed bin Saeed Al

Maktoum

Gardenia Residence, Jeddah

Aramco awards Halliburton contract for

unconventional gas stimulation services

DHAHRAN —

Saudi Aramco on

Sunday signed the unconventional gas

stimulation services contract with Hal-

liburton to further improve the eco-

nomics of Saudi Aramco’s Unconven-

tional Resources Program.

The contract signing ceremony, at-

tended by Amin H. Nasser, President

and CEO of Saudi Aramco and Jeffrey

A. Miller, President and CEO of Halli-

burton, reflects Saudi Aramco’s pursuit

of unconventional gas to serve domes-

tic needs, offset local crude burning,

provide feedstock for chemical indus-

try development, and spur regional

economic development in line with

Vision 2030, the Kingdom’s national

transformation program.

The new agreement will provide

lumpsum turnkey stimulation services

which include major hydraulic fractur-

ing and well intervention operations.

Amin H. Nasser said: “Over the past

three years, Saudi Aramco has made

great strides in developing our un-

conventional resources program, with

emphasis on unconventional gas as

an important clean energy source for

the Kingdom’s future. Now, with this

contract formalized today with Hal-

liburton, we enter the important next

phase of achieving our gas expansion

objectives. Halliburton has been a reli-

able provider of products, services and

technologies to our company for many

decades. We welcome their expertise in

unconventional resources, and we have

great confidence in our joint ability to

achieve operational and cost efficien-

cies for this important growth area.”

Saudi Aramco’s Unconventional

Resources program spans three areas of

Saudi Arabia: North Arabia, South Gha-

war and Jafurah/Rub’ Al-Khali.

— SG

Saudi Aramco CEO Amin H. Nasser (standing center), Halliburton CEO Jeffrey A. Miller

(standing, first from left) and Saudi Aramco Sr. VP for Upstream Mohammed Y. Al Qahtani

(standing, first from right), attend the signing ceremony for unconventional gas stimulation

services contract on May 27, 2018 at Saudi Aramco headquarters in Dhahran, Saudi Arabia

EMAIL

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Additional supply of 30,000 residential units in Jeddah seen by 2020

trend was first noticed after the

implementation of the white land

tax, which led to cautious behav-

ior from investors and end-users,

resulting in a considerable drop in

activities in the segment.

However, the sale prices and

rentals of villas in the western

districts of Jeddah are the highest,

especially Al-Shati, Al Hamra and

Salama, compared to the other

districts of Jeddah. The average

sale price of villas in these areas is

SR7,000 per square meter. The av-

erage rentals of villas ranged from

SR 120,000 to SR 150,000 annually,

based on their size, location, ac-

cessibility, quality of construction

and finishing, construction age

and proximity to major commer-

cial areas. The average sale prices

of standard villas vary between

SR4,500 and SR5,500 per square

meter in northern and eastern ar-

eas, while in the southern side, it

is SR3,500 per square meter.

Commenting on the report,

Eng. Rani Majzoub, Head of Real

Estate with KPMG Al Fozan and

Partners, said: “While the Resi-

dential Real Estate market in Jed-

dah is currently witnessing a cor-

rection in the sale and lease rates,

this would serve the interest of

the nationals by reducing cost of

housing which is a primary objec-

tive of any government.”

Majzoub added: “The attrac-

tive investment opportunities is

for real estate developers who

bring with them value-added real

estate products/services and take

into consideration the needs and

abilities of their end users; since

the old strategy of buying, keep-

ing, and speculating land prices

has no future potential anymore.”

“The new residential villa de-

velopment projects will be appro-

priate in the northern area, Obhur,

due to the increased demand and

modern infrastructure. Mean-

while, the eastern areas of Jed-

dah are suitable for the apartment

development projects because of

their proximity to the city center

and the available integrated road

network”, he added.

With a current Jeddah resi-

dential market supply of 0.8 mil-

lion units, the report expects an

additional supply of 30,000 resi-

dential units by 2020 of which the

majority of this upcoming supply

will be provided by Al Ra’idah In-

vestment company, owned by the

Public Pension Agency, that will

deliver 6,160 apartments and 1,180

villas in different phases. In addi-

tion to other prominent residen-

tial projects, such as the Gardenia

Residence, Al Farida, Al Mayar,

Masharif, Diyar Al Salaam and fi-

nally Al Hilal Tower 2.

The report added that the

majority of the new supply is fo-

cused towards the north and east

sides of the city as the central

zones has become saturated with

limited availability of land, while

seafront areas are expected to of-

fer further high-end products in

the future.

KPMG’s report revealed that

the performance of the retail sec-

tor remained subdued in 2017 and

market has witnessed a modest

decline of 4 - 5 percent in rentals.

The report also indicated that the

new upcoming supply (if deliv-

ered as announced) amid ongoing

slowdown is likely to put more

pressure on the rental rates.

Regarding the office sector,

the report pointed out that both

rentals and occupancy rates have

dropped over the past year. While

there has been a modest decline

in rental rates of Grade-A offices,

rentals of Grade-B office build-

ings located at secondary loca-

tions witnessed a higher drop of

8-10 percent.

Majzoub said “given the

characteristics of the recently

delivered and upcoming office

buildings, we expect a further

reduction in rentals of Grade B

office buildings with poor main-

tenance and limited amenities.

However and as the government

is actively working to attract for-

eign investments into the coun-

try, such investments are likely to

generate more demand for office

spaces in general.”

“There was around 25,000

square meters of new office space

completed during 2017, bring-

ing the current stock to approxi-

mately 1 million square meters.

Furthermore, it is expected that

around 200,000 square meters of

office space is due to enter the

market in the short to medium

term,” Majzoub added.

The report has also pointed

out that the performance of hos-

pitality sector has softened in 2017

and both the occupancy rates and

the Average Daily Rates (ADR)

witnessed a declining trend. The

market has witnessed a decline of

approximately 8 percent in occu-

pancy rate, while ADR remained

relatively stable, dropping only

2-3 percent.

Meanwhile, the report has

also indicated that the city’s mar-

ket is likely to witness the deliv-

ery of around 5,000 hotel keys in

the coming 2–3 years, which will

increase the current hotel stock

by 47 percent.

— SG

Startup of Barakah Unit 1

nuclear operations near

ABU DHABI —

Nawah Energy

Company, the operator of the

Barakah Nuclear Energy Plant

in the Al Dhafra Region of Abu

Dhabi, has entered the next phase

of preparation for nuclear opera-

tions. With construction of Unit 1

recently completed by the Emir-

ates Nuclear Energy Corporation

(ENEC) and joint venture partner

Korea Electric Power Corporation

(KEPCO), Nawah has completed a

comprehensive operational readi-

ness review to generate an updated

schedule for the start-up of the first

peaceful nuclear energy reactor

in the Arab world. The results of

Nawah’s review forecast that the

loading of nuclear fuel assemblies

required to commence nuclear

operations at Barakah Unit 1 will

occur between the end of 2019 and

early 2020.

The schedule review was car-

ried out in strict accordance with

the principles of a healthy nuclear

safety culture, which requires

conservative decision-making to

support nuclear safety. Conse-

quently, the resulting projection

for the start-up of Unit 1 opera-

tions reflects the time required

for the Plant’s nuclear operators

to complete operational readiness

activities and to obtain necessary

regulatory approvals, all of which

are all designed to ensure safe, sus-

tainable nuclear operations after

start-up. The review, which was

led by Nawah’s team of nuclear

experts, as well as the participation

of ENEC, and international nuclear

experts, reflects a conservative ap-

proach intended to ensure that the

highest standards of nuclear qual-

ity, safety and security are, firmly

established as the foundation for

future nuclear operations in the

UAE.

Only after all preparations for

nuclear operations are success-

fully completed and Nawah has

received an Operating License for

Unit 1 from FANR, will operators

begin to load nuclear fuel assem-

blies and initiate operations.

“Nawah’s commitment to meet

the highest standards of quality

and safety is the main driver for all

our work,” said Mark Reddemann,

CEO of Nawah. “As a result, our

review relied on global nuclear

standards to analyse the remain-

ing work required for nuclear op-

erations, and we are confident that

this new projection for Fuel Load

gives Nawah a nuclear-centric and

conservative schedule to deliver

nuclear operations in alignment

with the highest standards of safety

and quality.”

Reddemann added: “Unit 1 is

the pioneering nuclear energy re-

actor in the UAE and will set the

benchmark for the three remain-

ing Units of the Barakah Plant and,

possibly, for other nuclear energy

projects in the Arab world. By

achieving high standards in Unit

1, Nawah is setting a robust prec-

edent for the subsequent operation

of Units 2, 3 and 4, as well as for the

regional industry.”

ENEC and KEPCO, as joint

venture partners and owners of

Nawah and Barakah One Company,

the entity managing the commer-

cial and financial interests of the

Barakah project, provide support

to Nawah’s safety-led and quality-

centric approach to preparing for

operations in order to ensure that

the highest nuclear standards are

achieved within the earliest sched-

ule possible.

Per UAE law, all activities re-

lated to nuclear energy and tech-

nology are under the supervision

and regulation of FANR, which

has been conducting extensive

inspections and reviews of the

project since ENEC, on behalf of

Nawah, submitted the Operating

License Application for Units 1&2

in 2015. Additionally, and as part

of its preparations for operations,

Nawah is also seeking indepen-

dent assessments by the Inter-

national Atomic Energy Agency

(IAEA) and the World Association

of Nuclear Operators (WANO) to

ensure all aspects of the Plant meet

the highest international standards

of nuclear quality and safety.

—SG

streamline registration and licens-

ing procedures that will link all the

free zones in Dubai to a data cen-

ter under the supervision of the

Council, and route orders to the

concerned authorities for approval.

In this context, the DFZ Council

established a permanent adminis-

trative and technical committee to

oversee the project and set a time-

table for its implementation.

The Council also overviewed

the latest developments in the free

zone e-commerce initiative, pre-

sented in April 2018 to Sheikh Mo-

hammed bin Rashid Al Maktoum,

Vice President and Prime Minister

of the UAE and Ruler of Dubai.

The effort seeks to stimulate the

national economy through devel-

oping an ecosystem that boosts the

quality of e-commerce services.

Dubai’s free zones have the poten-

tial to become global e-commerce

hubs, as they are perfectly posi-

tioned to fulfil orders locally and

internationally.

Furthermore, Dubai Airport

Freezone Authority (DAFZA) pre-

sented the Dubai Blink initiative

in cooperation with Dubai Future

Foundation. Aimed at establishing

the first digital platform for free

zones that leverages artificial intel-

ligence and blockchain technolo-

gies to streamline trade among the

entities, the initiative will help ex-

plore new areas of investment, re-

defining the concept of investment

development in free zones.

During the meeting, the DFZ

Council commended several free

zones for lowering their fees in re-

sponse to Sheikh Mohammed bin

Rashid Al Maktoum’s directives

to reduce the cost of business op-

erations and facilitate investment.

The Council also discussed the

mechanism of granting no objec-

tion certificates by the government

bodies that have been mandated to

issue licenses to free zone compa-

nies. The DFZ Council will work

with various entities to enhance

the companies’ experiences and re-

view the scope of the certificates to

improve the ease of doing business

in free zones.

The Council also examined

the assessment process to combat

money laundering and the financ-

ing of terrorism.

—SG